How are Royalty Fees paid for a Dickeys Barbecue Pit franchise?
Dickeys_Barbecue_Pit Franchise · 2024 FDDAnswer from 2024 FDD Document
- 4.2 ROYALTY FEES.
You shall pay a continuing nonrefundable "Royalty Fee" throughout the term of this Agreement, equal to six percent (6%) of the Net Sales (as defined in Article 4.6) of your Restaurant, which shall be due and payable and shall be electronically drafted on your Bank Account (as defined in Article 4.4 below) on or before the Monday following the calendar week to which such payments relate.
If the date on which such payments would otherwise be due is not a business day, then payment shall be due and drafted upon on the next business day.
You shall not be entitled to withhold any payments due to Dickey's on grounds of alleged non-performance by Dickey's under this Agreement.
The calendar week for which Royalty Fees are due is sometimes referred to as the "Sales Period."
- 4.3 SALES REPORT.
You shall, during the term of this Agreement, on or before the third (3rd) day of each calendar month, submit to Dickey's a report (the "Monthly Sales Report"), prepared and approved by you setting forth (i) your Restaurant's Net Sales for each Sales Period during the previous calendar month; (ii) the amount of the Royalty Fee due for each Sales Period during the prior calendar month; (iii) the Marketing Fund contribution due for each Sales Period during the prior calendar month; and, (iv) an income statement and other reports for your Restaurant.
Source: Item 22 — CONTRACTS (FDD pages 95–96)
What This Means (2024 FDD)
According to Dickeys Barbecue Pit's 2024 Franchise Disclosure Document, franchisees must pay a continuing royalty fee equal to six percent of their restaurant's Net Sales. These royalty fees are nonrefundable and are due and payable weekly. Specifically, the fees are electronically drafted from the franchisee's bank account on or before the Monday following the calendar week to which the payments relate, also referred to as the Sales Period. If that Monday is not a business day, the payment is due on the next business day.
Dickey's Barbecue Pit requires franchisees to submit a Monthly Sales Report by the third day of each calendar month. This report must include the restaurant's Net Sales for each Sales Period during the previous month, the amount of Royalty Fees due for each Sales Period, the Marketing Fund contribution due for each Sales Period, and an income statement and other reports for the restaurant.
The Franchise Agreement stipulates that franchisees cannot withhold payments due to Dickey's Barbecue Pit based on alleged non-performance by the franchisor. Failure to report Net Sales as required may result in Dickey's debiting the franchisee's bank account for an amount equal to the last Royalty Fee and Marketing Fund contribution debited, along with a late fee. If Dickey's discovers that the debited amounts were less than what was owed, they will debit the remaining balance from the franchisee's bank account on a specified day. This level of detail and strict payment enforcement is typical in franchise agreements to ensure consistent revenue streams for the franchisor and to maintain brand standards across all locations.